CareCloud, Inc.
Q3 2017 Earnings Call Transcript

Published: 6 Nov 2017

[Operator:]

Good morning, and welcome to the MTBC Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Shruti Patel, General Counsel. Please go ahead.

[Shruti Patel:]

Thank you. Good morning everyone. Welcome to the MTBC 2017 third quarter conference call. On today's call are Mahmud Haq, our Chairman and Chief Executive Officer; Stephen Snyder, our President and a Director; and Bill Korn, our Chief Financial Officer. Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. All statements, other than statements of historical fact, made during this conference call are forward-looking statements, including without limitation statements regarding our expectations and guidance for future financial and operational performance, expected growth, and business outlook. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate, or similar terminology and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements. Finally, on today's call we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our third quarter 2017 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results. With that said, I'll now turn the call over to the Chairman and CEO of MTBC, Mr. Mahmud Haq. Mahmud?

[Mahmud Haq:]

Thank you, Shruti. Thank you for joining us on our third quarter 2017 call. We are pleased to report revenue of $7.5 million for the third quarter. This represents growth of 50% over the first nine months of 2016. We have achieved this growth through successful integration of our MediGain acquisition and the ramp up of our new sales organization. Our year-to-date organic sales bookings have already exceeded our full-year bookings from any prior year and we expect a strong finish during the balance of 2017. As we have grown our revenue, we have also expanded our margins. We're reporting adjusted EBITDA of $609,000 for the third quarter, the highest in our company's history, and an increase of 368% over the same quarter in 2016. Also our non-GAAP adjusted operating income was $356,000 during the third quarter, representing our second consecutive quarter of positive non-GAAP adjusted operating income. Our non-GAAP adjusted operating margin was 4.7%, a record since we have been a public company. In addition to significant revenue growth and profit improvement, we are pleased to report that our balance sheet has never been stronger. Since our last earning call, we have fully repaid our $10 million credit facility with Opus Bank, two years earlier than the original maturity date. We also have paid Prudential the entire remaining balance of $5 million plus interest that was owed for our MediGain acquisition. This debt repayment, combined with our strong financial performance, enable us to secure a $5 million revolving line of credit with Silicon Valley Bank to support our future growth. I would like to turn the call over to our President, Steve Snyder, to take you through the details of our third quarter performance. Steve?

[Stephen Snyder:]

Thank you, Mahmud. Good morning everyone and thank you again for joining today's call. Throughout this year we've discussed our commitments to certain key objectives including ramping up our business development team and enhancing our industry-leading platform to support continued growth. We've made great progress in both areas and I look forward to addressing both in turn. First, with regard to business development, while we have spent less than 4% of our revenue in sales and marketing so far this year, we're generating more than $3 of annualized revenue for every $1 spent. Our strategy of building lead generating relationships with other industry stakeholders and increasing our visibility at industry trade events has enabled us to sign much larger groups and achieve a record year of new sales bookings. In view of the strong return on our investment, we intend to further increase our sales and marketing activities during the year ahead. Second, as to platform enhancements, we are very pleased by the early success of the newest components of our solution. For example, during the first 60 days of our talkEHR rollout, more than 250 providers practicing across 44 states in more than four unique specialties and subspecialties signed up for talkEHR. While talkEHR is offered free of charge to U.S. healthcare providers, we also offer a premium billing upgrade at a very competitive price point and we've already seen a few of our early EHR adopters select our premium billing solution. Throughout the fourth quarter and beyond, our team will remain focused on driving additional signups for talkEHR, promoting comprehensive use of this innovative platform, and up selling talkEHR users to our premium billing solution. Separately our newly launched EnrollmentPlus SaaS Solution achieved an exciting key milestone with the recent signing of an important new customer, one of the nation's top ten insurance carriers. EnrollmentPlus which is an outgrowth of our successful clearinghouse solution is designed to automate the processing and validation of group insurance enrollments. Our new EnrollmentPlus solution will represent approximately 1% of our revenues during the fourth quarter of 2017 and we believe that it has the potential to be a much larger revenue driver in 2018 as we continue to demonstrate proof-of-concept, increased revenue from our newest customer, and sign additional large customer for this unique SaaS platform. I'll now turn the call over to Bill Korn, our Chief Financial Officer, to provide you with a detailed review of our third quarter and year-to-date financial results. Bill?

[Bill Korn:]

Thank you, Steve. We're pleased to report that revenues for the third quarter of 2017 were $7.5 million, an increase of 41% compared to $5.3 million in the same period last year. The increase was primarily due to the MediGain acquisition. The 50% growth number that Mahmud mentioned was the growth in year-to-date revenue both are great numbers and we're proud of the results of our efforts. Our third quarter 2017 GAAP net loss was $980,000 or 13% of revenue, an improvement of $714,000 compared to a net loss of $1.7 million in the second quarter of 2017. The GAAP net loss in the third quarter was largely a result of non-cash amortization and depreciation expenses of $664,000, as well as $463,000 of non-cash financing costs which were written off as a result of the early termination of our Opus credit agreement. $714,000 improvement in our GAAP net loss from last quarter was primarily due to a $780,000 reduction in amortization expense. When we acquire businesses the tangible assets are typically small, so most of the value is assigned to customer relationship intangible assets which we amortize over three years. We purchased Omni Medical Billing Services, Practicare Medical Management, and CastleRock Solutions in July of 2014 at the time of our IPO and the intangible assets from these acquisitions were fully amortized by the end of June. Our amortization expense was reduced by 61% during third quarter and will reduce even further in future quarters with small reductions each time we completely amortize additional intangibles from other acquisitions. The GAAP net loss for the third quarter 2017 was $0.14 per share calculated using the net loss attributable to common shareholders divided by the weighted average number of common shares outstanding. Non-GAAP adjusted net income for third quarter 2017 was negative $319,000 or negative $0.03 per share compared to the adjusted net income of negative $208,000 in the same period last year. The decrease was primarily due to the $463,000 of non-cash financing costs. Non-GAAP adjusted net income per share is calculated using the end of period common shares outstanding. Our third quarter 2017 GAAP operating loss was $275,000 or 4% of revenues which represents an improvement of $1.1 million or 80% from the $1.4 million operating loss in our prior quarter. The GAAP operating loss also benefited from the $780,000 reduction in our amortization. GAAP operating loss excludes the provision for income taxes, net interest expense, and other income and expenses, which are included in the GAAP net loss. Non-GAAP adjusted operating income for the third quarter was positive $356,000 or 5% of revenue. The third quarter 2017 adjusted operating income represents an improvement of $207,000 from the $149,000 adjusted operating income in our prior quarter. This is our second consecutive quarter of positive non-GAAP adjusted operating income which excludes non-cash expenses such as $419,000 of amortization of purchased intangible assets and $126,000 of stock-based compensation expense, as well as $85,000 of integration and transaction costs associated with recent acquisitions. This reflects the fact that our business is now at a scale where our revenues exceed our cash operating expenses. Adjusted EBITDA for the third quarter 2017 was $609,000 or 8% of revenue compared to adjusted EBITDA of $130,000 or 2.4% of revenue in the same period last year. The third quarter 2017 adjusted EBITDA represents an improvement of $141,000 from the $468,000 of adjusted EBITDA in our prior quarter, reflecting the significant cost savings we have achieved. Third quarter adjusted EBITDA increased by $479,000 or 368% from third quarter 2016 and represents the highest quarterly adjusted EBITDA MTBC has achieved in our 15-year history. As our business now has a higher scale, we are able to spread our fixed expenses over a larger revenue base and generate larger adjusted EBITDA than we ever have before. A difference of $1.6 million between adjusted EBITDA and the GAAP net loss in the third quarter of 2017 reflects $664,000 of non-cash amortization and depreciation expense, $673,000 of net interest expense, of which $463,000 was non-cash financing costs which were written off as a result of the termination of our Opus credit agreement, $126,000 of stock-based compensation, $85,000 of integration and transaction costs related to recent acquisitions, and $65,000 of provision for taxes. As Mahmud mentioned our revenues for the first nine months of 2017 were $23.5 million, an increase of 50% compared to $15.7 million in the same period last year. The increase was primarily due to the MediGain acquisition. For the first nine months of 2017, the GAAP net loss was $5.4 million compared to a GAAP net loss of $4.8 million in the same period last year. The GAAP net loss is largely a result of non-cash amortization and depreciation expense of $3.6 million as well as $570,000 of interest plus $673,000 of non-cash financing costs and restructuring charges of $276,000 recorded during the first quarter of 2017 related to closing our offices in Poland and Bangalore, India, and shifting the work to our teams in Pakistan and Sri Lanka to gain operating efficiencies. Adjusted EBITDA for the first nine months of 2017 was $763,000 or 3.2% of revenue, a 267% increase compared to adjusted EBITDA of $208,000 or 1.3% of revenue in the same period last year. As of September 30, 2017, the company had $2.8 million in cash and positive working capital of approximately $913,000, a $5 million improvement from the working capital deficiency of approximately $4.1 million reported at the end of second quarter. The company raised gross proceeds of $7.9 million from the sale of approximately 315,000 additional shares of our non-convertible Series A preferred stock via four small public offerings during the quarter. This was in addition to the approximately $7.4 million raised from the sale of approximately 295,000 shares of Series A preferred stock sold in June. These shares trade on the NASDAQ capital market under the ticker MTBCP and pay monthly cash dividends at the rate of 11% per annum. The cash costs associated with our Series A preferred stock is far less than most businesses paid for term debt. Term debt is typically repaid over three to four years, so the cash used is 25% or 33% annually on top of the interest rate as compared to a total cost of only 11% per year for our Series A preferred stock. Our Series A preferred stock is perpetual, has no mandatory redemption although the company can choose to redeem shares at $25 per starting in November 2020. So our cash cost is much lower and there were no restrictive covenants. The company used a portion of the net proceeds of these offerings to repay in full our term loans outstanding with Opus Bank which were approximately $7.3 million as of December 31, 2016. In addition, the company paid Prudential Insurance approximately $5.3 million which cover the remainder of the purchase price from our acquisition in MediGain plus interest. In early October MTBC entered into a new revolving credit facility with Silicon Valley Bank and repaid and terminated our revolving credit facility with Opus Bank. The Silicon Valley bank credit facility is a $5 million secured revolving line of credit where borrowings are based on a formula of 200% of repeatable revenue adjusted by an annualized attrition rate as defined in the agreement. Under the Silicon Valley agreement, the amount currently available to the company to be borrowed is in excess of $4 million. The SVB credit facility can be used for growth initiatives including acquisitions with SVB's approval. Based on MTBC's current financial position, the fact that our operating losses are dramatically reduced, our adjusted operating income and adjusted EBITDA are positive, and our cash flow from operations is anticipated to be positive, we are very pleased to no longer be including the going concern disclosure which we included in our previous 10-Qs. We now have a solid financial foundation receives the company well-positioned for growth. That concludes my review of MTBC's financial results. And I'll now turn the call over to our Chairman and CEO, Mahmud Haq.

[Mahmud Haq:]

Thank you, Bill. We have had a record quarter and we are well-positioned to build on our success as we finish 2017 strong and prepare for an exciting 2018. We look forward to giving you future updates on our progress as we move forward. We appreciate the support of our shareholders and extend our thanks to all of our team members and their hard work and great results. Finally, we thank our healthcare provider customers for trusting us to help manage their practices. We will now open the call to questions. Operator?

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Keay Nakae of Chardan. Please go ahead.

[Keay Nakae:]

Thanks. First question is related to revenue retention. In Q3, we saw about little less than $300,000 sequential decline from your Q2 revenues. So talk about what the revenue retention is looking like especially at MediGain.

[Bill Korn:]

Thanks, Keay. So we're very pleased that our revenue retention and our client retention has been very strong from the MediGain acquisition. We typically estimate that we're going to lose 1% a month of clients and we found this typically in companies that we've thought about buying, we've seen these numbers when we look at competitors, we've seen these numbers and I'm very pleased to say that during the third quarter that was roughly our -- the attrition rate that we saw from clients during Q3. Now remember that revenue during Q3 probably has very little to do with client lost during Q3, probably more to do with client lost during Q2, since we only recognize revenue after we process claims, submit them to insurance. Insurance determines what they're going to pay and then actually remits cash to the doctors. We also saw a little bit of revenue decline that was unrelated to the clients. It's hard to know exactly what caused that. I know when Jonathan Bush gave his earnings call at athenahealth a couple weeks ago, he mentioned the two hurricanes; he mentioned uncertainty related to Obamacare. We don't have any direct information to tell us exactly what -- what's caused this. But I'd say our third quarter revenue was a little bit lower than we would have predicted based on clients that we had in our client retention.

[Keay Nakae:]

Okay. So for the full-year 2017 your previous guidance was $31 million to $32 million; is that still good guidance or are you changing that?

[Bill Korn:]

Yes, we're -- we decided we're not going to explicitly confirm or reaffirm guidance but right now I'd say there's nothing that would cause us to change the expectation for revenue for the year.

[Keay Nakae:]

Change the expectation from what you previously stated?

[Bill Korn:]

Right. No reason to change the expectation from what we previously stated.

[Keay Nakae:]

Okay, very good. In terms of operating expense we continue to see nice reductions especially on the G&A side. So as we move into Q4 -- are we, based on the Q3 results are we pretty much growing out the cost or is there anything additional we might see in Q4?

[Bill Korn:]

Yes, I'd say that we tend to look at ways to reduce costs without hurting service every single day. So clearly the lion share of costs have been reduced and consolidating our offshore operations in two locations have certainly helped. But there are both opportunities to reduce the expense and also there's the upside of additional revenue comes onboard from clients that new organic clients that we signed during the first nine months. We don't see that revenue fully reflected in Q3. You'll see some of that revenue coming on in Q4 without any appreciable increase in expenses.

[Keay Nakae:]

Okay. And then just a final question on what we should be thinking about for interest expense going forward what's the total amount of borrowing under the revolver and so what should given the rate on that what should we be thinking about interest expense going forward in the near-term.

[Bill Korn:]

Yes. So interest expense will be down from -- for several reasons. Right now, the amount of borrowing again it's a revolver so it tends to go up and down near the beginning of the month it's a few $100,000 as we pay payables that are due at the first week of the month and as we start sending out invoices as we start collecting from clients, you may see that revolver completely repaid for a proportion of the month. But the amount borrower will be measured in hundreds of thousands of dollars as opposed to the first nine months of the year where typically we were fully borrowed on our $2 million revolver. We started the year with $7 million of term debt and in addition we had $5 million dollars of debt from Prudential. So all the term debt is gone, all the Prudential debt is gone. The accounting for the interest expense also included with Opus capitalizing a fair amount of loan origination costs that were amortized over the full year life of the loan and again because we were able to pay that off after two years, we have to essentially write-off that $463,000 during Q3 so that's all gone. So I think you should be looking at much, much reduced interest expenses going forward.

[Keay Nakae:]

What's the rate on the SVB LLC?

[Bill Korn:]

So the rate right now is prime plus 1.75%.

[Keay Nakae:]

Okay, very good. That's all I had.

[Operator:]

The next question comes from Kevin Dede of H.C. Wainwright. Please go ahead.

[Kevin Dede:]

Good morning gentlemen. Thanks for taking my questions. Bill, just to go back on some of the questioning that Keay had on third quarter revenue and I appreciate the color that you offered on Athena, I was just wondering if maybe there that you've seen any seasonality or is it still kind of tough to tell given MediGain hasn't been in the full-year?

[Bill Korn:]

So the seasonality impact that we typically see which again I think others in the industry see as well tend to relate to more the first quarter. What we see in first quarter is that a lot of people have deductibles and more and more people have high deductible plans. So when you go to the doctor, we submit the claim to insurance, insurance says it's fully covered, instead of the insurance company remitting a check, they send an explanation of benefits saying that you, the patient, need to write a check for the remaining money. And unfortunately the average patient doesn't write their check instantly the date that the EOB arrives in the mail and we only recognize revenue when the actual payment is made. So that tends to be a phenomena that hits Q1 and hits to a small extent throughout the year, but of course with deductibles, they're all on calendar year basis. There's a little bit of seasonality, for example, the number of days that people are seeing doctors goes down with July 4 or Labor Day or whatever other holidays and the number of days that insurance is actually processing claims again changes by one or two. And again I was amused to hear Athena relate to the fact that there was one less day in third quarter of 2017 than there was in third quarter of 2016 and used that as rationale. I'd say for us that that's sort in the noise, so it's kind of high to look at external factors like that and say that that explains the revenue.

[Kevin Dede:]

Growth rate, yes, fair enough. So Athena also mentioned the Hurricanes and I was wondering if you could see sort of specific changes now based on geography, specifically Southern Texas and Southern Florida.

[Bill Korn:]

Yes, we actually saw lower revenue in Texas and Florida. I would say Florida, in particular, was a bigger decrease than we would have expected. And again it could be the hurricane, but we don't really know. So it is certainly possible. Again I would say if you were seriously in need of medical attention, you probably figured out what you were going to do with or without the hurricane. I'd say it's too hard for us to really blame something at this point.

[Kevin Dede:]

Right, right, right. But I guess right if something was sort of just subjective or not critical you might have not chosen right I guess that's one way, another way to look at it?

[Bill Korn:]

Absolutely. Right, there certainly could have been people who didn't see the doctor in Florida and again we saw a little decline in Texas, both Florida and Texas, the quarter-over-quarter decline was bigger than it was in the rest of the country. So it's certainly possible that that accounted for some amount, but again it's going to be hard for me to give you a number because it's probably not statistically significant.

[Kevin Dede:]

Okay, fair enough. So just back to the $31 million to $32 million you're saying that it's okay but you don't really feel comfortable officially affirming your guidance I guess if you could offer just a little more clarity on your stance, just so I have an understanding of your thinking?

[Bill Korn:]

Yes. I think one thing we want to be conscious of it is those when I look at revenue in Q3 and I look at Q4 so far, Q4 looks very strong, but not being able to say exactly what Q3 did what it did, I'd say in particular when I think about the revenue, the revenue is to me seems to be pretty clear that it's going to at least hit the bottom of the range. The EBITDA has a range and while we feel really good about it, I would say it's a little bit close to call. And we concluded that it was hard to be affirming one and being silent on the other and so we decided the right official stance here is to say we're not really going to sort of get into the quarter-by-quarter affirming things. But again when you look at where we are year-to-date, I don't really see jeopardy on the $31 million number.

[Kevin Dede:]

Okay. Just for a little bit more background on how you're looking at it and what you think you might speak to on this to investors going forward, I'm wondering when it comes time to report the fourth quarter, do you think you'll look at full-year 2018 and feel that you had sufficient time to figure out what happened in the third quarter to offer guidance for the full-year or how do you think we should think about that?

[Bill Korn:]

I don't think we've fully made up our mind yet.

[Kevin Dede:]

Okay.

[Bill Korn:]

Again I think we've had people say to us that if we were 10 times or 100 times the size given this kind of guidance makes sense, but that we are really small for a company to be providing guidance. But being small doesn't necessarily stop us from doing these things anyway.

[Kevin Dede:]

Well right, well right, I mean I think part of the message you might want to think about communicating is just the recurrence in revenue and the confidence that you have in that?

[Bill Korn:]

Yes.

[Kevin Dede:]

All right. So since you're still hammering above the quite teens though, could you just help me understand the $2 million that's on the balance sheet as of the end of September that's Silicon Valley or because I just lost track of the timing?

[Bill Korn:]

Yes. End of September, we had repaid all the term loans from Opus Bank during September. We had an agreement with our term sheet signed with Silicon Valley, but we knew that we were a week or two away from completely closing Silicon Valley. So we left the revolver remember Opus had a $2 million revolver and $8 million of term debt, so we left that that revolver sitting there with Opus on September 30 knowing that a week or two later we would close on Silicon Valley and as part of the closing there would be a payoff to Opus. And so we thought that was a simpler mechanism to just let that happen and while it would have been great to have closed SVB in September, so much happened with other financing that we were sitting there down to the end of the quarter and it didn't really make a difference did it wait till October 13. So that two that was outstanding on September 30 was Opus that was all repaid in full and actually some of it was repaid in the first week of October and the remainder was repaid in full at the time that we moved over to Silicon Valley on October 13.

[Kevin Dede:]

Okay, fair enough. So if you were to look at the bottom --

[Bill Korn:]

No, no, bottomed it out lot of moving pieces.

[Kevin Dede:]

Right, right. So I apologize for not keeping the timeline straight, but I do remember seeing the pad, now that you've mentioned that, so thanks for that, thanks for the review. Just curious if you could speak to this --

[Bill Korn:]

No apology.

[Kevin Dede:]

Yes, but just curious if you could speak to this, if you were to look at the balance sheet now was SVB holding any debt?

[Bill Korn:]

So today, there's about $700,000 outstanding and again on the first of the month we're typically sending wires overseas because our non-U.S. payroll happens on the 5th of each month. So we are typically drawing near the end of the month so that we've got the cash to send overseas and then as we get to the first and the second of the month we're sending out the invoices for the prior month and it takes some number of days for those invoices to get to clients. So typically we start seeing the cash coming in roughly a week or so later. So therefore the first week of each month we're typically drawing on the revolver.

[Kevin Dede:]

Okay, okay. Got it, thanks. Thanks so much. Steve, if you wouldn't mind, could you just help me get my arms around the 254 that you had on talkEHR and maybe relate that to the overall total client base that you have and what sort of feedback you're getting and then maybe some insight on how you see the balance of your base looking at it and maybe adopting it.

[Stephen Snyder:]

Sure, we'll be happy to. Thanks for the question, Kevin. So with regard to talkEHR when we look at the practices who have signed up, again more than 250 in the first couple of months of the launch, so we're really excited by that. Roughly two-thirds of those practices are in primary care. They tend to be smaller groups, which is really our target market for the EHR. And one of the interesting phenomenon we've seen is as we've seen other players in the industry that have business models that are more reliant upon the sale of standalone software solutions, we've seen them especially during this quarter begin to really struggle from a growth perspective, while a lot of the meaningful used incentives, those dollars are -- have since passed for the most part. So the stimulus from the government that supported the growth of -- or the purchase of more expensive systems is really for how many times the purpose is done. So what we've seen is really I think the same thing that our competitors have seen which is a growing reluctance to invest large amounts in EHR, and instead focus on finding a solution that's intuitive that's easy to use, that's interoperable and connected to larger practice management suite as a practice. So we really think that this solution is come at exactly the right time and again our strategy involves being able to up sell a certain segment of that user base as we continue to grow that user base to our billing solution, our integrated billing solution we're really excited to see some success in that. I would say just kind of even separating apart from that if we think about this quarter even more broadly from a growth perspective, we've also seen some pretty exciting things happening on two different fronts. One would be, the EnrollmentPlus which would be our newest software as a service SaaS solution and that EnrollmentPlus, we had one of the ten largest insurance carriers in the country signup as a client as a user of that solution which we really think is a validation that we're on the right path that we've really identified a need in the market and we've found and developed a solution over the last five quarters that is a great fit for addressing that need in the market. That first large client is signed up again represents -- will represent roughly 1% of revenue for the fourth quarter as we look at 2018. We believe that that client actually represent perhaps two or three fold that as a percentage of the overall revenue mix. And as we continue to have additional proof of concept and continue to move forward with other opportunities that we have in our sales pipeline relative to the solution, we really think that they could play a very important part of our revenue story going forward into next year. And I think a third key thing would be the real success of our business development efforts. As you know, Kevin really prior to the last year, our focus from a growth perspective was almost exclusively on acquisitions, and while we continue to see opportunities and we look forward in 2018 to pursuing additional acquisitions, we've really been building out an organic growth team that has really helped us grow during this last year and for every $1 invested in that sales and marketing team we've seen $3 of annualized revenue signed in new relationships. They've done some exciting things so far this year. Those larger accounts unlike the smaller accounts, larger accounts take longer to ramp up. So that revenue from any of those accounts is really has been ramping up towards the end of the third quarter and will still ramp up we believe in the fourth quarter for some of those larger groups. But frankly we still think we have a potentially exciting end of the year from an organic growth perspective as we look at our opportunities. So really we see those as three of the exciting things that are happening from a growth perspective. And to your question before as we talk about our fourth quarter results, our full-year results we look forward to really providing guidance in terms of continued growth and margin expansion throughout 2018.

[Kevin Dede:]

Okay, fair enough, Steve. Thanks so much for the additional color. But back to your third point here on the organic growth initiative, I'm wondering if you could just offer little more color on talkEHR and maybe how your customers are viewing it and maybe a little more insight on their road to acceptance. And then maybe any insight that you can offer on a competitive on how it stands as a competitive differentiator especially against some of the -- well I guess right many of your clients, competitors are really sort of doing things in half and I'm just kind of wondering if you could talk to how that sales and marketing effort might be making that talkEHR capability that you've developed more broadly known.

[Stephen Snyder:]

Sure. We'll be very happy to do that. First with regard to our existing client base as of today the overwhelming majority of our existing client base continues to be leveraging our legacy platform, the webEHR application. So the majority of our existing billing user base continues to be leveraging that platform today and that's really by design. At this point that application has been and was first launched about a decade ago was one of the top ranked applications for our target market of one to 10 providers. And many of those practices have really built their workflow around that particular application. So that's with regard to the existing client base. Over time they'll migrate to talkEHR as we go into 2018 but the majority of those practices are continuing to use the application that they've become accustomed to over years of usage. With regard to the new clients who are using to talkEHR really from a differentiation perspective and the how it compares to the competition, we've really designed it with usability as really being the key component of it and being able to leverage voice and converting voice to text both for populating the fields within the EHR and also for navigating the EHR. That's something that consistently we've seen in the -- in a recent broad-based study of survey of EHR users throughout the country. One of the consistent themes that interestingly enough came across was that the providers are looking for a solution that's easy to use, that's nimble and that's really what we've developed. From a cost perspective, absolutely of course really can't beat the cost, the overwhelming majority of our competition is charging for the EHR and it's our belief and I think even the competition has acknowledged this in their quarterly earnings calls to one extent or another that the industry has -- that the user base providers have become fatigued with this notion of making heavy investments in the healthcare IT, infrastructure instead looking for a solution that melds together the clinical components of the practice with the collections of the practice since the two are -- as we move forward are more and more intertwined in terms of levels of reimbursement. Our application does that and our business model again ties our revenue to a percentage of the practices collections once they're using our billing, so that further lines our interests.

[Kevin Dede:]

Okay. Yes, thanks Steve. Thanks for that color. Last question for me is just on the EnrollmentPlus that you mentioned. Could you offer little insight on how I guess how the insurance companies view it, what's -- I guess what's the incentive for them and maybe a little bit on how you're marketing that. So and I guess the sales the length of sales process and how long it took that one big provider to come over?

[Stephen Snyder:]

If we think about the clearing house more broadly within the healthcare industry and if we go back two decades, the overwhelming majority of the claims were submitted to insurance carriers on paper, the claims were received by paper were processed manually and then the checks were cut manually and the adjudication and the communications back and forth between healthcare providers and insurance companies were done by paper. It was a labor intensive expensive undertaking for both the healthcare provider or the billing company on one end of the transaction and the insurance company on the other end of the transaction. Over last 20 years, the clearing house industry has been built up and now it's for the overwhelming majority of transactions there is a clearing house between the healthcare provider or billing company on one end of the transaction and insurance company on the other end of the transaction. What that clearing house does is it significantly reduces the cost of both participant transactions by trading a standardized format and approach by automating that and it also increases the speed and reduces the error rate. We see a similar opportunity in the group insurance enrolment process which is really the primarily the enrollment of group insurance plans between employers and between insurance companies, the whole variety of different types of insurance enrollments. Today that's done manually. To the best of our knowledge there is not another similar application in the industry that's doing something similar to what we're doing. There are players who are trying to do components of this but we believe we've built something pretty unique that bridges that gap and acts as the conduit between the employers on one end, the insurance companies on the other, and we think we have the opportunity to do the same thing for both the insurance companies on the one end of the transaction and reporters on the other which is to significantly reduce the expense to speed up the overall process and to create a streamlined approach that allows a carrier to move away from paper manual processing to an automated one to many connection. So, I think that as the insurance companies are looking at the solutions they look at it and understand like our insurance company client that we spoke about before that there's a significant opportunity to reduce cost, to speed up the overall process and to reduce significantly the error rate in the enrollment process. So I think that's the key driver from the insurance company's perspective in terms of looking for a solution like ours. The sales process is a longer sales process. This first client has been in the pipeline for probably about four or five months. What our team has done in terms of building the connections within the industry and also helping to develop our product is our EnrollmentPlus team built a group that has met on an ad hoc basis. And it's comprised of representatives from some of the top insurance companies in the country from employers and from others who have reviewed our product over the last year or so when it's been in development they've provided their input. So we've really built the solution largely around the feedback and the wish list of many of these potential customers. So those conversations with those potential customers, who are involved that process are ongoing and we look forward to really continuing to develop additional proof of concept, continue those conversations that are ongoing with those potential clients and really to grow the existing relationship as well.

[Kevin Dede:]

Well, great Steve. Thanks so much for the background there very helpful. That color certainly had a lot more depth to the win so congratulations on that and congrats to all of you on the improved financials. Thanks very much for taking my questions.

[Stephen Snyder:]

Thank you.

[Bill Korn:]

So thanks Kevin, thanks Keay, we appreciate the great questions and with that I think we'll declare that our earnings call is over and we appreciate everybody taking the time this morning to listen to us. So thank you.

[Mahmud Haq:]

Thank you everyone.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.